tv The Cure for Capitalism LINKTV May 17, 2015 5:00am-7:31am PDT
[applause] >> well, i want to welcome you. i want to acknowledge the awe-inspiring environment that we're sharing this evening. the religious overtones might make you think you were in one of the two party conventions-- [audience laughter] but i hope in a few minutes to make you clearly aware that, other than the environment, not that much that i share with either of them. so let me begin by promising you two things: first, to provide to you a different way of understanding what's happening
to the economic system and our position in it than perhaps you have heard before. and even more important, and what this book is about, an alternative solution for dealing with it different from what you might have heard before. so, first, where are we here in the united states and in the world economy? and i'm not gonna tell you what you already know, which is that this is the worst economic crisis in my lifetime and therefore in yours, that it began in 2007, which means it is now coming to the end of its fifth year and that there is no end in sight, that the efforts of governments around the world, including the united states, to end it long ago have not proved successful, that the prognosis is not good, that the problem is almost like
a disease in the sense that it begins in the united states in 2007, 2008, and 2009. the europeans look at the united states and thank their lucky stars that it isn't so bad only to discover that it has metastasized over there. and the last 2 or 3 years, it's a terrible problem in europe, and americans are thanking their lucky stars that it isn't quite so bad here. the chinese are discovering that it is spreading to them. the russians and the indians have already discovered it, and the united states is now beginning to recognize that our own chances of coming out of it are being undercut by the realities in russia, china, and so on. it keeps going because they haven't found a solution. most of the effort to explain it involves games of blame. right now, we're all aware that the republicans blame the democrats and vice versa in an endless chorus that begins to sound
the same after the 14th speech by whoever's looking for a job promotion in whichever party. and then the blame goes beyond that. people on the left like to blame bankers. people on the right like to blame poor people who take out loans. so forth and so on. i want to break from all of that. i want us to acknowledge that in this economic system that we have-- which has a name; it's called capitalism--there are a set of rules. and that most people, because they really can't avoid it, play by those rules. bankers make loans in order to make money. corporations do what they do in order to make money, because that's what the people who make decisions in corporations are hired to do, and working people try to have a job that's decent and try to earn an income. and if they can't do what they think they ought to do as good citizens, as good parents with the jobs and incomes they have, well, then they borrow money, and that works out real well
because the banks are real eager to lend it to them, and we have everybody performing pretty much the way they are supposed to. when a society has people who are all playing by the rules and can show you that that's what they're doing and the end result is the kind of disaster we have, then it isn't any more appropriate to blame this or that actor. it's time to recognize that the system of rules is the problem. everybody's playing by the rules. everybody hopes that will all work out, but it doesn't. in my profession of economics, we have a great philosopher with which all economics courses begin. his name is adam smith, and he's famous for the following line: "if everybody pursues his or her own self-interest, it'll work out for the best for everybody." most of you know that that's silly. it's a wonderful rationale to go out there and do
what you want for yourself and not care about anybody else, but where that leads is exactly where we are... in a very, very bad crisis. so, let's begin by analyzing this crisis as the crisis of a system. and we'll go on to talk about this system even when it's not in crisis, because that's as big a problem as the crisis itself. but crisis is where we are. 2012 is the fifth year of this crisis. what does that mean? first and foremost, it means that we have in the united states today something on the order of 20 million to 25 million people who either don't have a job at all, have been without a job long enough that they've given up looking-- so-called discouraged workers-- or folks who have to take a part-time job because that's all they can find, but they would like to have a full-time job. the bureau of
labor statistics in washington keeps records like this. and so, it's roughly 20 million to 25 million of our fellow citizens, something on the order of 15%, 16% of our workforce. that's staggering. alongside of these people, there's another statistic. this one comes from the federal reserve. it's a statistic called the capacity utilization rate. it measures what proportion of the tools, equipment, machines, office space is being used for production and what part is sitting idle, what part of our capacity is being utilized. and the federal reserve has now pointed out, for some years it's roughly hovering around 20% is not being utilized. 20% of our tools, equipment, machines, vehicle fleets-- you name it--sits idle. ok, you don't need an advanced degree in economics-- i have one, but you don't need it--to understand that if there are 20 million
to 25 million people who want to work and don't have a chance, and we have 20% of the tools, equipment, raw materials for those people to work with, that a system that cannot put these two together to produce a quantity of wealth that would solve most of our social problems quickly is a system that doesn't work very well. that's a fundamental problem of our economic system--that it produces a crisis of this sort. i won't take the time to tell you the details of what happens to people who are unemployed, particularly for long periods of time, and the current unemployment is very long for people who are without work. they suffer self-esteem problems. they suffer mental and physical health problems. their families are more likely to break up. they lose the skills that they once had when they're out of work for long periods of time. their children have more difficulty in school. the costs of these kinds of crisis
last for generations. the amount of human damage, the amount of waste of resources is beyond calculation. a system that does this, let alone a system that does it repeatedly, cannot talk about efficiency because whatever the efficiency is of a particular factory or a particular production process is completely overwhelmed by the inefficiency of massive numbers of unemployed people, un-utilized resources, and lost output that could meet social needs. but it's worse. it's not just that we're in a crisis now of horrific proportions for 5 years. it's that this is the second major breakdown of this capitalist system in the last 75 years. the last one was the 1930s. begins in 1929 and isn't really over until 1940, '41.
a terrible crisis. and between the end of that one in the 1930s and the beginning of this one in 2007, the national bureau of economic research, which is the official agency that counts crises, counts 11 more--11 more downturns in which millions of americans--and i'm not even talking about other countries-- lost their jobs, capacity un-utilized, output foregone, again and again. crisis is not an occasional interruption. crisis is part of how this system works, and it always has as far back as the last 200 years of capitalism. it has a crisis every few years. and it's important to stress this, because politicians tend to like, for obvious reasons, to characterize each crisis as if it were a special occurrence. so, for example, every president in the united states since
franklin roosevelt has, during his tenure as president, had at least one economic downturn. every one. and every president said at one point, "here are the policies i am proposing, and they have 2 great qualities. number 1--they will get us out of this crisis. and number 2-- they will make sure we never have a crisis like this again." every president promised it. no president has delivered on the promise yet. that tells you something. the system is crisis-prone, and that is a very serious defect to say the least. but i don't want to limit myself to crises. i want to also talk about the system when it's working well, when the unemployment is relatively low. what happens
then? first, capitalism has a tendency everywhere to polarize income and wealth. it's a kind of driven system in which the competition, as you all know, of enterprises one with the other, is pretty cutthroat. and most of the time, the company that wins the competition literally eats the one that has been defeated-- buys its equipment, hires away its workers, and so we get the ever-larger winners. that's why most big industries have 2 or 3 left. they've consumed all the others. they become very big and powerful. these days, they become so big and powerful, they're all household names. and when they begin to have trouble, they make us all pay for their problems by telling us they're too big to fail. that's how big they've come. so, we polarize in a capitalist system. we produce poles of great wealth at one end and poles of real poverty at the other.
sometimes, sometimes when the system really breaks down, masses of people get so angry that they begin to push back. very interesting. in america, that happened in the 1930s when we had a terrible depression, when the unemployment rate, which today is about 8.5% officially--the number of adults looking for work as a percentage of our labor force. if you look at the comparable number in the depths of the depression, it was 3 times that--25%. really very bad. and interestingly in the 1930s, the american people pushed back. they were not passive. they were active. let me tell you what they did, because it's a part of our history that americans tend not to learn too well in school for reasons i will leave to your speculation. we had the biggest labor movement organization that the country ever had. something
called the congress of industrial organizations organized millions of workers in the 1930s in the depths of the depression. workers who had never been in a union before. we'd never seen that in the united states. we had never seen it before, and we've never seen it since. in the midst of that misery of a depression, of that poverty, american workers decided that a labor union could maybe save them, and they were ready to join. and joining was often tough, working against government, working against a corporation, working against the police. alongside the unions, the c.i.o. that did the organizing, were 2 other institutions that were important then, and that may surprise you. socialist parties here in the united states and the communist party of the united states were powerful. they had a lot of people, and they worked together with the c.i.o. and together, they went to the government at that time, and they said 2 things: "we represent
the mass of working people, and we don't want to suffer the way we're suffering in this breakdown of capitalism. you gotta do something." and they addressed themselves to a kind of middle-of-the-road democratic politician who had just gotten elected president on a program of a balanced budget-- franklin roosevelt. and they said to him, "you've gotta do something for the people." and the socialists and communists said, "you gotta do something for the people," but they added a little barb, "because we think that there's a better system, an alternative system, to capitalism. and if you keep performing as badly as you're doing in the depths of the depression, we're gonna try to establish that alternative." and they pointed across the ocean to the soviet union, said, "see? like them." that scared folks. and mr. roosevelt was a good politician, smart. he listened, and he responded because he knew politically that these 3 forces--c.i.o., socialists, and communists--
had enormous support in the united states, they were very powerful, and that they could mount a serious problem for this country. so, roosevelt went to his friends. you know, he came from a very well-established, very wealthy family. and he went to his wealthy friends, many of whom were businessmen, and he said, "look, i think i gotta do something here, because if i don't, we're gonna have a lot of trouble. and, dear gentlemen, you who are very wealthy and you who run the big corporations, not only do i think we need to do this, but you're gonna have to pay for it. the government has no money. we're in the depression. nobody's paying any taxes. nobody has jobs. so you're gonna have to pay--the rich and the corporations. and here's what you're gonna pay for. i'm gonna take care of the people. i'm gonna help poor people, unemployed people, an american population that's in trouble.
i'm gonna help them big-time, and you're gonna pay for it. and you know why? because if you don't, coming down the road are those socialists and communists, and they're gonna cut you a lot less attractive deal." and, you know, something interesting happened. the business community and the rich were split. half of them did not buy that argument. they were not convinced by mr. roosevelt. but half of them were. and roosevelt was a good politician. with half of the businesses in his pocket, he knew he could count on the c.i.o., the socialists, and the communists to kind of work something out, and here was the deal. "i'm gonna get the money from the corporations and the rich. i'm gonna help you on a scale you've never seen before. and in return, you're gonna stop talking about getting rid of capitalism. you're gonna mute that part of your message. you're gonna celebrate me as the guy who gives the mass of people something they never got before."
so, what did roosevelt do? three interesting things that i'll mention. one--he created the social security system. we never had that before. in the midst of a depression worse than today, when there's no money in the hands of the government--none is coming in; it's really hard; we can't do anything--the president goes on the radio and announces that every american over 65 years of age who's had a lifetime of work is now gonna get money from the government for the rest of his or her life. thank you very much. what? where would all the money come from? but you know. i've already told you. from taxing the corporations and the rich. and no sooner did he do that than he announced another new program: unemployment compensation. we never had that before in the united states. in the midst of a depression, when tens of millions of people are out of work, the president announces, "i want to tell you all that everybody who is out of work is now gonna get a government check every week for a year or two to make this easier."
and who's gonna pay for that? mm-hmm. the corporations and the rich. but now comes the third program. president roosevelt says, "if the private enterprise system of the united states cannot provide work to tens of millions of american citizens who want to work, well, then, i'll do it." and between 1934 and 1941, roosevelt created and filled 12.5 million jobs. well, you're hired by the federal government. and who paid for all of that? mm-hmm. the corporations and the rich. wow. i'm not describing the soviet union or some fantasy or some impossible dream. i'm just describing american history, and not so long ago, either. wow. just to drive it home, roosevelt--how did he actually do this? he was very courageous and clever.
in the midst of world war ii, to make this point really strong, he proposed a novel income tax. here's how it would work. above a certain level--and the level in those years was $25,000 a year-- the income tax rate that would have to be paid is--president's proposal--100%. that's right. $25,000 a year would become a maximum income. you know how we have a minimum wage? this would be the maximum income, the other end. the republicans, predictably, went crazy. and they fought and they yelled, and they reached a compromise. and the compromise was that above the top, the highest rate, the richest americans would henceforth have to pay 94%. the law signed by the president. if you were rich in the 1940s,
every dollar over the top limit, the highest bracket that you earned, you got to keep 6 cents. and the other 94 cents went to the president and to the government. and, by the way, in the 1950s and '60s, it continued. 91% was the top bracket. republicans endorsed it. democrats endorsed it. republican and democratic presidents maintained it. and, by the way, why? the answer was easy, and everybody understood it. it went like this. we have just come through the greatest depression of our economic life, the 1930s, followed by the most severe war threat we've ever had, world war ii. the country has to pull together to overcome and rebuild from these two great sequential crises, and from each must be taken their capacity to
contribute. so we're taking from the rich their capacity. here's some statistics for you. beside the--income tax on individuals, in 1945-- i did a little calculation-- for every dollar that the federal government got in income taxes on individuals, it got from corporations $1.50. corporations as a whole paid taxes on their profits 50% more than individuals as a whole. what's the relationship today? for every dollar that is taken from individuals, corporations today contribute 25 cents. and what's the highest tax bracket? is it the 91% of the fifties and sixties? no. it's 35%. what's the lesson here? in the 1930s, the gap between rich and poor was reduced because the government took
from the rich to take care of the mass of people who had been suffering in unemployment and poverty through no fault of their own. through the breakdown of the system. no sooner was the war over than the business community and the rich went to work to undo what had happened in the 1930s. to undo the high taxes on corporations and bring them down to where i just told you they were, to undo the tax on wealthy people to bring them down to where they are today. and therein lies a lesson that it was the upsurge of a militant organized working class that overcame for a while the tendency of capitalism to polarize. but the lesson here was better learned by the business and the rich than by the working people because the business and the rich went to work.
no sooner was the war over, they went to work to undo what had been done in the 1930s. the economic history of the united states in the last 30, 40, 50 years has been the undoing of the new deal. that was the name roosevelt gave to what he did in the 1930s. from which the following lesson can be further distilled. the problem for corporations and the rich, who keep running a system that plunges us into crisis after crisis, who have really no effective way to prevent them, who likewise tend to polarize into rich and poor, the problem for corporations and the rich is this--they've got an economic system that constantly provokes the mass of people into thinking that they might be able to use the political system to offset
the effects of the economic system. the danger for capitalism has been, if you actually give everybody the vote that the vote will be the way. the political way will be for the majority to recoup for themselves in politics what they lost in the capitalist economic system. that is a great fundamental danger for capitalism. and how has american capitalism, and that in other countries, dealt with this? and the answer is, you've got to control the politics. because if you don't, it will come back and undo what you've achieved in your economic life. they learned that in the great depression by watching what the c.i.o. and the socialists and the communists did. so in the last 50 years, the business community went to work. they destroyed the labor movement. they destroyed the socialist parties. and they destroyed
the communist parties. i don't have the time to go into that. but if you read your history, you'll see it. in the private sector of the united states today, the official percentage of workers that are members of a union--represented by a trade union--is under 7%. 93% of private sector workers in the united states have no union. the notion of unions as a powerful social force requires a lack of understanding of what's going on in our society that boggles the mind. so what have we got? we've got all the mechanisms in place that allow the business community and the wealthy to control the politics. you all know these stories. they're the ones who fund the candidates; they're the ones who fund the parties; they're the ones who hire huge armies of lobbyists to work on an ongoing basis with whoever gets elected.
and they fund all these think tanks that produce endless resources and reports and researchers and specialists for the radio and the television to shape the consciousness of what americans see, hear, and think. and the end result are events sort of like the two political presidential conventions in which not a word is said about the system, not a word is said of the sort i've just finished telling you about in which they each blame each other as if the politicos had the power to do much about all of this. but there's no systemic analysis, no systemic recognition. what else about this system is bizarre? well, one of the results of the shaping of consciousness is the following kind of really strange idea. it goes like this: if you give
corporations a chance to make profits, then good things will happen. so, for example, we have to create a profitable business climate because then businesses, say by cutting their taxes or by deregulating them or by allowing them to do all kinds of things, then good things will happen to the rest of us. there's a simple logical problem here. if you cut the taxes of business, then they have more money because their taxes are lower. what they do with that money is their decision. and their decision is governed by making as much money as possible. that might mean that they will create a job, ok, but not here. in a place where the wages are much lower--say, in asia--which might be nice for them but isn't particularly good here. or they might lend it to a government or they might play the stock market. or they might do--i don't know--
let's see. what did they do over the last 30 years? the most impressive things big corporations did with the money they saved from taxes and with the profits they were able to get from deregulation, really, one of the most spectacular things they did was to begin to pay corporate executives at the top stupefying amounts of money. we are the leader in the world-- i'm sure you're all proud-- we're the leader in the world in the gap between what we pay our top executives and what the average worker in that company that the executive is leading gets. in other places, the numbers are like 30, 40 times. in our country, it's 300 or 400 times. the big people at the top took the advantage of the lower taxes they had to pay to make themselves stupefyingly rich, which in a free enterprise they're free to do. the notion that if you do something good for a corporation, they will in some sense pay you back is childish.
that's not what they do. that's not what they're hired to do. in this system, they always try to pay fewer taxes. they always try to find the most profitable thing they can do with their money. what that does for the rest of us, who knows? but there's no control here. it's also like allowing a company to go and close a factory in cincinnati and open it in shanghai. the justification of the logic of the way our culture works is, "well, we will all benefit because the prices that they will charge for the things they make over there will be less than what they"-- but they're not required to do that. when they close the factory here and go to china, it's precisely with the big idea of selling the good at the same price to you in the supermarket but just having to pay lower wages to get it manufactured over there.
why should they lower the price? they make more money if they didn't. it's not their job, as they will explain to you, to take care of the american economy. they weren't hired by the american economy. they were hired by the shareholders of that company to make money for that company. every technological breakthrough made by capitalism in the last 300 years has been justified by whoever was making it on the grounds that, "with this new machine," or, "with this new process, human labor will be less drudgery." machines will replace people. we will not have to work so hard and so long. how interesting. according to the oecd, americans today, where we have the most advanced technological breakthroughs imaginable-- americans today do more hours of paid labor than any other working class in any country on the planet.
where was all the leisure supposed to come from? all the work that was saved? less work for mom from all those appliances in the store-- that you could buy. meanwhile, mom has to go out and work because the family can't survive unless she does. she's not doing less work. she now has two jobs--the one in the house and the one in the labor force. it's absurd. and, by the way, that's not the fault of the technology, which really was liberating, but it's the fault of a system that has to keep making money whether the technology's advanced or not and drives people, because that's how it makes money. last thing about this system before i talk about a solution-- not only does it produce crises and the terrible waste and damage, not only does it polarize unless people react, and not only does it deny us
the fruits of technical change, the fruits of all kinds of breakthroughs, but, even more, what it does to us as individuals needs to be understood. and that's a perfect transition to what i think the solution is. most production in the united states is done by large corporations. we are a society that celebrates small businesses. there's something very poignant about that. "small businesses," we are told, "are the backbone of america." no, they're not. big business is what runs this economy. small business is a long, old story. small business, we are told, creates 3 out of 4 jobs. quite true. small businesses also go out of business on a scale that is fantastic and loses 3 out of 4 jobs. see, that little detail is left out. a small business is a very hard thing to survive.
and the reason is it's dependent on big business from whom it buys many of its basic needs and they therefore control. so the big businesses are where the work and the basic employment and production is done in the united states. and how does a big business work? it's a remarkable institution. a tiny number of people make all the decisions. here's how it works-- the group is called major shareholders-- the handful of people who have big blocks of stock, because in a corporation, you get a vote for each share you own. it's not one person, one vote. it's how many shares you own. so, for example, if you own a million shares, you get a million votes. if your grandmother left you two shares, you get two votes. if your grandmother had no shares and you don't have any, you get no votes. so the major shareholders control the bulk of the decisions. and what's the most important decision they make?
they select the people who run the corporation. they're called the board of directors, usually 15 or 20 people. and they make all the decisions to produce; how to produce; where to produce; and what to do with the profits. all the basic decisions. the vast majority of people come to work monday to friday 9:00 to 5:00, and they do what? they make whatever that board of directors decides that company's going to make, and they make it in whatever way with whatever technology that board of directors decides working on whatever raw materials that board of directors presents to those workers. and the board of directors decides whether the workers are here in the united states or over there in india or wherever. and when the work is done and there are some profits, the board of directors decides what's to do with it. for example, to pay the top executives spectacular salaries. that's a decision they make. or to move production to
another country or whatever. they make that. the vast mass of the workers--a thousand in a small company, 100,000 in a big one, or in the case of really big ones, say, wal-mart, a million. a million people who come to work at wal-mart, and a group of 10, 15 people-- if you look at the board of directors, you'll see a stunning number of them have the name walton. but even if you didn't pay attention to that, a tiny group of people. now, for a country that defines itself as committed to democracy, there's something stunning here. democracy means that if you're affected by a decision, you get to participate in it, the idea being if a decision made by a mayor or a congressman or congresswoman or a senator or a president is something that affects us, which it obviously does, then we all get to participate.
"well, uh, let's see. in where you work, what they make affects your life." how they make it with this chemical or that, that affects your health, your life. whether they do it here or they fire you and do it in another country, you bet that affects your life. so what exactly is your participation in the decisions you have to live with the results of? answer--nothing. you come to work, and you do what you're told. and at the end of the day, you've poured your brains and your muscles into making something. and you know what you're supposed to do. and you all know because we all go to the same schools. at the end of the day, you leave there whatever it is you helped to make. and you go home. and if you forget and try to take with you when you go home one of those things you helped to make, a few hours later
there's a knock on the door and people in dark blue uniforms hurt you and take it back. because it's not yours. you made it. it's a very clear idea. you do not participate in controlling your own product. how do you square that with democracy? there is no way to do that. and so we conveniently as a society don't ask the question. don't think about it. that's the success of the business community and the wealthy who want to make sure we don't think about it because it is an impossible contradiction of the way we've organized things. and it has extraordinary effects. everyone who goes to work for a corporation feels on some level--consciously or unconsciously--their powerlessness, their irrelevance
to the decisions that affect them, including whether they have the job next week or not. that inculcates in people a fatalism, a lack of care, a feeling of ripped-off-ness. i'd like to remind everybody that there's an interesting admission of that in our culture because on the way home from almost every corporation, when the workers are finished with the day, they pass a bar or two, which invites them to come in after work to enjoy a happy hour, which is a very subtle way of reminding them what the quality is of the hours that precede arrival at the bar. those are the unhappy hours. and they're unhappy because you are a drudge. you're a drone. you're almost like a piece of machinery. and so you don't care
that much about your job. you're interested in how much it pays because your excitement is elsewhere, maybe with what you can buy with the money you get from working. but the job itself for most workers is purely a means to get money. and yet it's amazing, if you think about it, 5 out of 7 days for the major part of the day, you go to work. it's the most important part of your adult life. why isn't it made to be a learning experience, a joyous experience, an experience that develops you and develops your potential and develops your understanding? it ought to be. but you accept, don't you? we all do that it isn't, that all of that is subordinated to making money, and the people at the top think the best way to make money is to stick you in a little cubicle with a little computer and throw muzak at you until you go crazy.
that has very bad effects on human beings. and those are ramified in our culture. many of us think that there really isn't a lot of commitment to our democratic system, even in the little space we have for it, which is politics, because it's excluded from our economic system, in the way i just said. but we do have it in the community, sort of. and so we're kind of disappointed that half the american people don't bother to vote. and half of those who do bother to vote seem to be more interested in details, like whether they can have a gun in the back of their truck than in some of the larger issues that might affect them even more than the question of whether they can have a gun in the truck. their attitude towards politics is one of not caring that much, not learning that much. maybe going in and voting, but who knows? we're kind of disappointed. our democracy seems formal.
well, i got a thought for you-- if you deny people, 5 out of 7 days a week, any real say in something that really shapes their daily life, which is the conditions of work, you're basically teaching them that they're not decision makers, that that's somebody else's job. you train in every day. you understand all the decisions are left to people. you don't even know where they are. they sit in a boardroom a thousand miles away. so why are you gonna, then, get excited about politics, which looks to you more and more like the same thing? somebody far away makes a decision. you're supposed to get excited once a year, go into a little booth, move a little lever? you're gonna have some say? nah. you want politics to be real in the community, you have to make it real where people are, where their job depends, their income depends, most of their life is spent. otherwise, you can't blame them for not being interested in
politics when you've really trained them into not participating, denied them a participating role. here's another way it stunts human beings--we all have complicated and mixed capacities. in order to find out what you're really good at and what your contributions to society can be, you have to have a chance to see what you can do. and it doesn't even stay the same across your life. you have different capacities at different times. why should some people have all the control, the design of what's going on, the direction decisions and other people just do what they're told? if all you're doing is what you're told, you're not gonna develop your capacity to innovate, your capacity to redesign a process, to redirect a process. because you don't have any place to develop those skills. imagine how much innovation we could have if we really gave everybody a chance to learn--
and how the system works and how the production of this--whatever you help to make--how that's done if we gave you some training when you were growing up in the design. wow! we would all be different people because we wouldn't have divided the society into a tiny number of people who make all the decisions and therefore have to learn how to do that, and the rest of us who--"no point in learning that and no point in teaching that to you because you're never gonna do that." "you're just gonna be a barista at starbucks." and for that, the amount of direction and skills you need are small. i don't mean to pick on starbucks. i enjoy picking on starbucks, but i don't mean to pick on starbucks. ok. what, then, is the solution? well, you can see from the logic of what i've done that it isn't blaming the banker for doing what bankers do, and it isn't blaming workers for doing what they do. workers are told
to enjoy the american dream. they are paid until the 1970s-- they're paid more every decade. it's remarkable, the american wage system. a hundred years before the 1970s, wages go up and americans could afford with a rising wage to have a higher standard of living, which is half the reason why millions of immigrants came from all over the world. in the 1970s, as i hope most of you know, real wages stopped rising in the united states and have never resumed. that was, of course, a crisis for the american worker, who had promised to himself, to herself, to his and her children the american dream--a home, a car, a vacation, a college education. all of it. what a torture to a population that has learned to believe that with every decade, you'll make more money and that'll allow you to have these better things and to give them to your children, and you promise it and you believe in yourself, as you're capable of doing it,
and suddenly the wages don't go up anymore. and it's not explained to people that the wages didn't go up anymore. they're just left without the wherewithal to achieve the american dream. and if you don't make it a national conversation and if you don't explain it to people why that happened, then americans blame themselves individually. "i didn't go to the right school." "i didn't take the right courses." "i didn't major in the right thing." "i didn't work hard enough." "i didn't please my boss," whatever. "it's me." and they turn inward and blame themselves with all the social consequences of that. and when that doesn't solve the problem, they do something very understandable over the last 35 years. they want to hold on to that dream. and if the wages don't pay for it, borrowing will. and so the american people go on a borrowing binge the likes of which no working class in the world has ever seen.
they borrow everything. we had to invent the credit card for mass consumption starting in the 1970s. that's when master card, visa, all that got going. so everybody could borrow. we now have a new generation we never saw before-- college students who come out of college with 100,000 or more in debt only to discover that we have such a collapsed economic system that they either will not get a job or never get a job to ever get out of that debt. nobody prepared them for this. and they're very upset. these are systemic problems. we're gonna blame the college student for borrowing too much? we're going to blame that worker for trying to hold on to what every advertisement told him or her was the nature of a successful life? how cruel can you be. this system isn't organized very well. and it's producing lots of dysfunctional people,
everyone in this room, of course, excepted. but out there. so what, what do you do if the system doesn't work? well, you have to take a very big step. you have to ask yourself, what are the alternatives? is there another system? and americans have been taught for a long time not to go there because that gets you into a dangerous area. but tonight, safe as we are in this place, we're gonna go. and i may surprise you as to where i think we ought to go. but i've given you a lot of hints along the way, and now you'll see. i think we ought to bring democracy to the workplace, to bring it where it has never been brought before. and here's how it would work. and this is not a complex idea. and it isn't a new idea.
and i'm not the only one who thinks it or pushes for it. it's an old idea, as you'll see. but here's the idea. let's organize our enterprises, big and small, in a new and different way. let's democratize them. let's arrange that all of the people who come to work together make decisions. no more major shareholders, no more board of directors. the workers themselves become their own board of directors. here's a sketch just to have an idea in your mind. monday to thursday, you come to work. you do what you always did. friday you come to work, you don't do what you always did. together with all the other workers, you have meetings all day on friday. and together in
those meetings--one worker, one vote--you decide what to produce, how to produce, where to produce, and what to do with the profits your work has produced. another name for this that's old in american history--and even older in other countries--is called cooperative, community enterprise. lots of words. i really don't care what word you use. but i want to stress the democracy at work theme because we're a country that's kind of obsessed about democracy. so let's use that. let's bring democracy to the place where most of us adults spend most of our time most of our lives. seems reasonable if you're committed to democracy to institute it where you are most of the time. otherwise, what does your commitment amount to? wow! think about it.
i'm now gonna take you through some of the implications of doing this because i want you to see potential, where it is. so first... if the board of directors is the workers themselves, then one of the decisions they have to make, which is the decision made by board of directors now, is how much different people get paid. aha! in capitalist countries, like our own, the board of directors decides what to pay the top managers. and as i've already mentioned to you over the last 30 years, they have been extraordinarily generous, so that top managers of major american corporations get salaries in the millions or tens of millions of dollars every year. that's normal. well, if you're upset, as most americans who pay attention to
this are, that the gap between rich and poor has become more extreme and that that poses all kinds of dangerous social problems and tensions, then i have news for you. perhaps the single biggest factor accounting for the growing divide in the united states are the immense salaries paid by corporations to their top executives. if the workers collectively decided what everybody got, what can you imagine might happen? would the workers collectively give a tiny number of themselves huge salaries and everybody else would have to scramble and wouldn't have enough? would the majority of workers vote to hobble themselves in that way? nah, not likely. kind of, "gosh, not at all. not gonna happen." so if you're concerned, as many americans are, to do something about
the gap between rich and poor in the united states, here's a really powerful way to get at that--make it a democratic decision. that would allow workers to pay some people more than others if they thought that's appropriate. but my guess is the ratio would be 3:1 or 4:1 or 5:1, not 300:1 or 400:1. and, you know, we have a hint-- an actual practical example to show this. right now in the world, the single most successful enterprise that has converted to a democracy at work system exists in the north of spain. some of you may know about it. it's based in a little community, a little city called mondragon in the basque region, just below the pyrenees mountains in the north of spain. this is a company that has been growing since its founding in the mid-1950s.
so it's a good half-century old. it started with 6 workers. it's a system of cooperatives. it has grown quite effectively. it now has over 100,000 employees. it's the seventh-largest enterprise in all of spain. and it's just a set of cooperatives that coordinate with one another. in each of them, the workers are their own board of directors. and, guess what, the workers made a rule-- the highest paid person in the co-ops, in any of them, doesn't get more than 6 1/2 times what the lowest-paid worker does. so there is no such enormous gap between rich and poor. and if you travel in the north of spain, where this company is the largest company in that part of spain, you will see that their cities and towns--i was there this summer--you can see right away. you don't have the slum over
here and the fancy neigh-- you don't have any of that. there are people with more and less, but it's, the gap is completely different. it's a part of the world in which you could say something like the following and not be lying through your teeth: "everybody's in the middle class." they really did that. but if you want that, this is a way to get it. here's a second thought: you think if the workers made the decisions collectively, they would decide to close the factory or the office where they're working and open one in china, thereby destroying their jobs, their incomes, and the community? ehh, i would guess not. not a big chance of that. you know what they would do instead? they would say, "whatever problems our company has"--like all companies, they
have problems--one of the solutions that are not available is leaving. you can't do that. and, by the way, there's nothing new about this. there used to be a time not so long ago here in the united states that companies said, "the only way we can survive--we have to be able to compete--is we need to be able to hire these 6 year olds." it's called child labor. "and if you don't let us do it, well, then the british will allow it to be done. they'll do it and the spanish and the french. we'll never be able to compete. and you must..." and at a certain point, the american people looked at the conditions of 6 year olds-- and we had that working-- and said, "we understand you have competitive problems. we understand you have the... but that you can't do. you can't have kids, and you can't do what you're doing to them. that's out. you have to find another way." now, does that make sense? why exactly didn't we say to them, "uh, you have problems.
we understand. we'll try to help you. but one option you don't have is you can get up and leave. you can't tell your workers on friday, 'don't come in on monday. we're moving to shanghai.' mm-mm. not available. you lose. find another way. get a better machine. reorganize your production pro-- produce something else. 50,000 things you can do to try to save your situation, but that you can't do. and you know why? because it destroys people's lives and it destroys the community. kind of what it does to the children, which is why we don't let you do that. and we don't let you make one worker work 18 hours. wouldn't let you do that either. it'd be nice if you could, but we don't let you do that." well, if workers made the decision, they would long ago have ruled out destroying themselves and their jobs. and so the whole question of losing your producer facilities to other countries would not have happened.
here's another example. suppose the workers run their own factories. we have a little acronym, wsde. it's called worker's self-directed enterprise. to summarize what we're talking about, the workers make their decisions collectively. they are their own board of directors. let's turn to the question of using a technology that is difficult or dangerous-- a bad chemical, a very noisy piece of equipment, something that pollutes the water or that throws something out of your smokestack that is not good for people to breathe. well, in most american corporations and in most international corporations, the board of directors sits in new york or london or paris or something like that and they make a decision based on what's best for the bottom line. that's their job. and if that means a technology that's toxic for people, "well, we'll put a filter on the smokestack," or, "we'll
throw something in the water to neutralize the acid," or whatever it is. but if the workers made the decision, you think they would do that? it's them--they're the ones who have to breathe in the air, their children. it's their neighbors. it's their community. they're not going to do it. they're going to be much more vigilant about the environment because they live in it. they're not a distant decision maker. they're an on-the-spot. and that's one of the old ideas about democracy. you make the decision because you live with the results. so i think we would have had a different distribution of income and wealth in this country; we would have had a very different relationship to keeping the jobs and the production here; and we would have had a very different relationship to the environment. or to make a long story short-- i could go on with examples all night--we would have had a different history as a nation. we'd look different; we'd feel different; we'd relate to one another differently.
and guess what. if the gap between rich and poor was narrowed, that wouldn't, then, allow the rich to buy the political system the way they do now, would it? so it'd make a contribution there, too. wow! sounds interesting. let me take it another step. is this feasible? i know some of you may be entranced by the idea but be wondering to yourself, "well, you know, how do you do this?" well, i've already told you about mondragon, which is a very successful corporation composed of hundreds of these co-ops that coordinate with each other. so they do prove it can be done. plus, there are co-ops all over the place. not very far from here around san francisco are a group of bakeries-- arizmendi bakeries. maybe some of you know them. they're set up like that. there's a cab company in san francisco--yellow cabs.
33333 that you call there, that's a co-op. america's full of them. people have figured out that this is an interesting way to organize businesses. so there really is no problem in doing this. people have figured that out. "well," you might, say, "yes, the examples, like the arizmendi bakery or the yellow cab company, those are small enterprises." you're right. they're small. but let me remind you of something historically-- the origins of capitalism out of feudalism, that was always small businesses. in the midst of big feudal landed plantations, little capitalists grew up. a little capitalist with 3 workers or 6 workers. that's how it started-- in the cities of europe. out of feudalism, the system that preceded, capitalism was
born in little enterprise-- that's typically how this is done. new systems emerge beginning with small ones. can they become large? again, i refer you to mondragon. from 6 workers in 1956 to over 100,000 now. they managed it. they're very big. they're very successful. well, the second question you might have is, where are they gonna get the money? how could workers start a collective business? with what? this is an interesting problem. where would the money come from? and guess what. there are solutions to that, too, because this isn't a new idea. and there's lots of examples. i'm just going to give you one to tantalize you with the possibilities. but i'm going to choose one that comes from the real world just so you know people have tried it and done it. this time, i'm referring to something called the marcora
law, which is a law in italy, passed in 1985. here's what this law does-- what an interesting idea, which in italy it is still on the books. if you become unemployed in italy, you have a choice: you can either get your weekly unemployment check the way a person in the united states does--and in italy, it runs 2-3 years that you're eligible--or you have a second option, which we don't have in the united states. the italian government will give you your entire 2-3 years of weekly unemployment checks up front as a lump sum on one condition--you must have at least 10 other workers, unemployed like you, who make the same decision. and the money, the lump sum, has to be used as the capital
to start a collective business run by the workers. what? did i make this up? no. go google it. "marcora law." you'll read all about it. the italian trade unions and the italian socialist and communist parties-- surprise--pushed for this. wow. and it's been a big success. it has helped launch hundreds of cooperative enterprises in italy, which has a long tradition of this sort of thing. and guess what. workers-- surprise--choose rather than being unemployed and collecting a check, which is a depressing condition to be in, to rather have a business that they can devote themselves to. they put much more of themselves in it. and guess what. from a social point of view, which is, kind of, better, 10 workers collecting a weekly check or 10 workers
building a whole new business that they really care about? and which they'd better care about, because if that fails, they can't go back on unemployment. they've gotten their unemployment. a very interesting idea. and the italian government provides assistance along the way--technical assistance and so on--and subsidized loans. and are there precedents for the government helping in other ways? of course there are. here in the united states, for example, we have a longstanding government entity called the small business administration, the sba. here's the idea: in the united states-- it's been going on for decades-- small business complained that there wasn't a level playing field. when they competed with big businesses, they had disadvantages. and they wanted to have a better shot at succeeding as a small business, so they wanted the government to set aside money and support to help small businesses--not available to big ones--to help them compete more success... and we have that.
the small business administration gives grants, makes loans at a subsidized rate to help small-- the idea being, america's better off if it has more small businesses than would otherwise be the case. we do the same thing with minority-owned businesses for the obvious reason. here's a thought: a worker's self-directed business administration. why? because the american government would like to see these kinds of enterprises develop and grow. and why that? here's a democratic thought for you: if the government supported that, helped to develop cooperative enterprises everywhere, then all americans would have freedom of choice in a way they've never had it before. we would all, as young people or old people, be able to compare what it's like to work in a top-down hierarchical capitalist enterprise--because they're all around us--but for the first time, we would have a choice. there'd be lots of cooperative enterprises. they'd be as common
as anything around the neighborhood. and you could ask people--your friends and neighbors who work there--what that's like. you could even intern for a summer or try it for a while and see whether the kind of job you'd have, if you're not just a worker, but also a director with other people that are in the same boat with you, might be a much more interesting, much more self-developing, much more exciting, much more democratic workplace. and americans could choose it. and the rest of us could even have the following--we could have a law that says on a piece of clothing or an appliance or whatever it is you buy in a store--the label no longer simply says "made in china." but we could require the label to say, "does this come out of a capitalist top-down hierarchical enterprise," whatever words we use, "or does it come out of a cooperative enterprise?" and we could see which one makes better products, and we could support what we believe in by buying that. it's a little bit of a play on
the fair-traded idea that some of you know of. just imagine what could happen if you thought like this, how different our economic system would be if we took seriously the idea of democracy at work, and what it could do to get us out of the inequalities we suffer in this society, the loss of jobs and income, the disappearance of our "middle" class that everybody whines about, the destruction of our environment. last point. and then we'll open up to some questions. there has, of course, been a debate in the last hundred years between capitalism, the system we've been criticizing, and an alternative.
and that alternative had various names, socialism and communism the most famous. and i'm not here to give a long discourse about that, but we have to face that. what was the hallmark of the socialist and communist systems, whether they were in china or cuba, russia and so forth? two things. one--socialism meant that the property, the productive property--tools, equipment, factories, land--was no longer to be private property owned by individuals but rather the property of the whole people run and administered by the state. so from private property to social property. and the second big difference between capitalism and these alternatives was that in capitalism, you used the market as your mechanism of distributing things, whereas in these societies, governments planned the distribution, decided who would get what and so forth.
so the differences between the two systems were understood to be private versus social property, markets versus planning. what always struck me is interesting--whatever you thought about that alternative was that nobody said a word in this great hundred-year struggle between the two about the organization of the enterprise. it's as if it didn't matter. it's as if in capitalism, you had a bunch of workers going to work every day. then there was a revolution. the flags changed their color. and after the revolution, the workers went to work again, but instead of it being a board of directors selected by the major shareholders, it was a board of commissars selected by the communist party and the government, and that the actual difference it made to the worker, who was sitting up there doing it, eh, wasn't all that exciting. i think there's a point to that criticism of the socialist and communist alternative, but it's a criticism that this idea
of democracy at work gets at. because if the workers are the ones who make the decisions, then it's the workers who provide the state with whatever resources it gets. it's those workers who pay the taxes, either as individuals or as the directors of their corporations. the people at the base will finally control the resources of the society. and the state will have to be accountable to them, not just because they're the voters but because they're where the wealth is; they're where the money is; they're where the resources are. and instead of having fancy ideas about how to democratize the old examples of socialism and communism, this is a practical way to institutionalize the power at the base of the mass of people. closing point--whether or not
i've persuaded you, let me invite you to take a look at this book. and the point of this book, which is new, is simply to make the best case i can, which, you know, an hour of conversation doesn't allow me to do, but the best case i can for what i've been talking about. but the real reason to pursue these ideas are two, two real reasons. one--you will not hear a word about them from the established voices of this culture. not from the republicans, not from the democrats. they won't make a criticism of the system because they're cheerleaders for the system. whatever their disagreements, it's never about this system. if you want to think critically, you have to go somewhere else. and these kinds of ideas open up the space of a change of thinking about the system, not being trapped within one way of
thinking how to organize an economic society. and the second reason is that this opens a vista for a whole different kind of life. imagine what it would mean if all workers now had a new definition. you're not just a person who does this thing on the assembly line or does this thing in the office or has this job in the store. yeah, you have a particular function, but you're also part of the decision-making organization of the work. you're gonna have whole parts of your brain and personality being developed on the job that were never utilized before, that were never developed before. we're gonna have a whole new kind of human being coming out of this experience. we're going to have to reorganize our educational system. we're not going to have elite schools for a handful of people who run everything and then the community college for everybody else. uh-uh. we're now going to have to give proper education, finally, to
everybody because that's what the job requires. it's a whole new way of organizing life. we do not have to be prisoners and victims of a system that doesn't work well. we have options. all we have to do is learn from the past experiences of co-ops of all kinds how to build on that to make it possible to change things. and people are doing it around the world and around the united states. you don't have to feel alone. they used to do it as an interesting experience. many of them did it as a religious commitment. many of the communes and collective--come out of all the religious communities. but we now have a new and additional reason-- capitalism, like every other economic system we've had,
was born, evolved, and eventually dies, like everything else. it may be difficult to understand and scary to see. we've had a run with capitalism for a while--for 200, 300 years, but two major collapses in 75 years. the vast waste of people and resources that every one of these crises produces. and everything else i've talked about tonight ought to be more than enough to at least allow us finally to discuss, to debate, to explore alternatives that might allow us to live a lot better lives than we do now. there's a new political party in germany that has a remarkable slogan. and it, by the way, sits in the german parliament with 12% of the vote in germany. one out of 8 germans votes for this party.
the slogan of this party is, "germany can do better than capitalism." thank you very much for your attention. [applause] >> i'm curious--your thoughts on the role unions might play, either as they exist today or in some other...form, other things that come to mind, like maybe, you know, like some more old- fashioned guild system where the unions are simply trade- based or other ones that operate across industry, like--like i'm an seiu member, for example, right? or are they just sort of anachronistic, sort of workers' vanguard spectacles that we can just kind of throw aside? >> good. wonderful question. let me try to answer. and again, rather than my spinning out my own thoughts about that, let me start from a concrete example. the steelworkers union
here in the united states, one of the largest unions in the afl-cio, here, stunned the world of american labor two years ago when they issued a press release announcing the formal alliance-- i'll use their words--the formal alliance between the steelworkers union of the united states, which--i don't know how many members it has, but in the hundreds of thousands, big union--with mondragon, the corporate--that huge, successful worker's self-directed enterprise in spain. and i remember many of us were taken aback. "what an interesting idea. an alliance." what did it mean? well, the details were hard to come by. it seems as though there was discussion, obviously, between them. they issued a joint press release and had a press conference. but it's hard to tell, so i'm now going to imagine where this might go. i'm not saying that's where they're
taking it. i don't know exactly where they're going to take it, or even whether they're going to take it somewhere, but here's what i would do. imagine a trade union movement with a completely different strategic idea from what it has typically been. unions have typically been organizations who make it possible for workers, instead of bargaining individually with the employer, to get particular conditions of work. the union bargains for the workers collectively. collective bargaining. and so it enters into a negotiation with an employer to get a contract that covers all the workers in a workplace. what unions do. and they try to get better wages than the workers have been able to get, better working conditions, and so forth. well, imagine now the following: the union sits down and bargains for the workers, but it doesn't just say, "hey, we would like higher wages or
better working conditions, and if you don't do that, we may strike" and all the usual that i think you understand. but now they have a new weapon, a new chip, if you might say, to play. "if you don't come to a reasonable agreement with us about wages or working conditions, we have another plan. we may withdraw the workers from your plant and set up our own." what? that's never happened before. what an idea. indeed, the union might begin to develop small enterprises that do things like a company that they're bargaining with, just to make it a little more realistic, so that when they say that to the employer, the employer has a new problem.
imagine an employer saying, "i want these and these concessions from you workers, or else i'm leaving the country." it happens every day in the united states. and the union, what is it going to do? it's afraid of losing the job, so it gives away a benefit program or a wage diss or something, medical coverage, in order to hold on to the job. it's very understandable. yeah, but suppose a union had another option. "ok. we want you not to leave, and we don't want to give you a concession." "but we're telling you, if you do not accept--you leave? we're going to take every one of the workers you fire, and we're going to set up a factory right here. right here. we may even take over the one you have abandoned, buy it from you, and we're going to go around the united states and we're going to explain to people that you went to china. and they can go ahead and buy it from you, or they can buy it from us--the workers you
abandoned that are here and that are asking you, as a fellow american, to support us." ooh. that company might think a little longer before it takes off for china because it's got a new problem. it might not want to do that. it might not want to take that risk. it might not want to face that kind of competition. it's a whole new ball game. it might also allow unions to do something for workers that they can't do now. when workers are unemployed who used to be members of such-and-such a local or such-and-such a union, they're now unemployed. they go get an unemployment check. suppose the unions are "no, there's something else we can do for you. we can help you. we can bring in specialists. we can help you set up, under the auspices of the union, an enterprise that will serve this community in all kinds of ways. and we will go to
the community because we're based in it and urge people to buy from this co-op rather than from where they've been buying. we can begin to develop a network." that's what mondragon did. that's how they grew that way. everybody helped everybody else. i don't know what all the benefits would be, but let me make a suggestion. a labor movement that has been declining without interruption for 50 years better come up with something new because what it's been doing hasn't worked. i'm not being disrespectful. i mean, i don't have the numbers. the graph that i teach in my classes of what has happened to unions is unambiguous. the line goes from here and it keeps going down. it's long overdue to change the strategica, and here's an idea. and wouldn't it be interesting if unions became known in america not just for doing the work for collective bargaining, for their members in such-and-such an industry,
but part of a social movement to rebuild a new society around a concept of democracy at work, becoming the champions for a whole new way of living and working. would give the unions a role in society that they once had, as part of a better world for people, a whole new set of opportunities going far beyond the job and the conditions of the particular place where the union was born. what an exciting new vista for a labor movement which really badly needs new ideas and new--so i was very excited by what the steelworkers and mondragon making an alliance might mean. but it'll take many people pushing in that direction to realize the potential. sir? >> because of your interview with--on "charlie rose"-- i'm fascinated, first of all.
i watch him almost every evening, so i get a pretty good sense of the way he responds to different people. he seemed to be a little bit uncomfortable... >> yeah. [scattered laughter] >> with some of the questions that he was trying to elicit answers, so i'd like your impression of that. second... >> heh heh! >> i'm fascinated by this concept of mondragon because i think that, you know, clearly we have a problem that we do not have an answer for. but at the same time, i look at this and i think in terms of the capital formation. so one of the things that'd be helpful for me to understand in the context of the employee, since 1956, what did they do to prepare themselves for after they retired? was there a capital formation within the company
itself, and within that context, because of their success, have there been other companies or other organizations within the spanish culture that have fostered like-minded...companies to go in competition, and what is the result of that? so that's 3. heh heh! >> yeah, real quick because we're running out of time. um... charlie rose's, uh...team came to us. we did not solicit the opportunity. they came in, and i think that's very significant. i think that "charlie rose," like other major news outlets and commentary shows like that, are beginning to recognize that a part of the conversation that folks like us were kind of kept from, public conversation, where
now--to make it very simple, the critique of capitalism is now part of the national conversation, and that wasn't true for most of the last 50 years, one of the points i tried to make on that program. so i take it as an enormously courageous thing that he did because he knew he was kind of pushing the envelope there, invite david harvey and myself. and i thought he handled it pretty well. he was very straight with us and he was partly uncomfortable because there was supposed to be a third person there who never showed up, and that always throws a-- you know, he had gotten prepared for a 3-way, and that chair had to be removed, for the tv audience shouldn't see. i understand mr. eastwood does that, but we can't do that. [scattered laughter] so there's no--the chair had to be removed and he was a little shaken by that. also, if you've ever been in one of these shows,
it's a collective hysteria. i mean, it has a logic to it, but there's all these people running around and these lights and cameras. it's--and we're all covered with pounds of makeup and it's very--it's a stressful--i mean, he's used to it, but it's a stressful situation. but i was pleased. i thought that really went pretty well and that we got a lot of feedback from it. i keep getting, like you, people who have seen it and talked about it, so that's very impressive to me. and i feel grateful that i had an opportunity to talk. mondragon understood this problem long ago. when you're as big as they are, they developed a number of specialized enterprises. for example, they have their own bank and so they handle all their banking, and that bank actually lends outside to non-mondragon entities as well. and they also set up retirement homes, and the bank runs its own retirement program for all workers. so a portion of the net
revenue of every enterprise is siphoned off, put into this thing, which it also, then, uses as seed money for more new co-ops, which then have to repay, and that builds up the fund for retirement. so if you work at mondragon, not only is your job guaranteed, so is your retirement for the rest of your life. and they have a growing retirement industry because they're so big. they have all these people who are--who need that when they reach 60, whatever it is. little younger than it is here--62, i think. and so they have all of that. i really do urge you--and i'm on the last point--are their people learning? they have a whole apparatus that does nothing but run courses in what they do. they have something called the mondragon university, has 4 different campuses. this is an enormous operation. when you visit them, you think you're walking into an amazing, large corporate headquarters because that's what it is. and they have
lots of buildings in various towns, and as i say, i went there and i was taken under the wing of a professor at one of their mondragon--that's what it's called, mondragon university. and he happened to be an american who went over there and he teaches business methods for co-ops. that's his specialty, is to help people from around the world who come there from all over the world. you can come for a day, you can come for weeklong seminars, all kinds of programs to teach exactly what they've done, but with an awareness that in each different country and in each different region, there will be the local customs and culture that have to be taken into account. and they can only do so much, but it's a very elaborate proselytizing, if you like, but all within the university kind of framework, a very--and very beautiful seminar rooms which we were taken to and all the latest audio-visual to help teach all of this stuff, and so they're
very--a very serious operation and very successful. that's why--and you can go. i mean, you just have to go in advance. you get in touch with them and you can come there, and they'll take you through and answer your questions. very good english. you know, they make sure to teach the different languages that they have, as europeans. very sophisticated operation. i was not ready for that. the corporate headquarters looked, you know, with manicured lawns and fountains and all of that stuff, you know? it looks like a--like what it is, a very successful corporation. they're very careful to avoid politics. i asked about that. "we keep away from spanish politics." they are clearly left-wingers. that's very obvious. but they're very afraid of the--they don't want to become part of the struggles among the parties, so they're very--and every government now needs them. every spanish government needs them. i should mention, if you're in--very briefly that there are special
conditions. the beginning of this thing was--the man's name was arizmendi. that's why the name of the bakeries in san francisco is in honor of a catholic priest, father arizmendi, who began this. so already you notice something unusual because this co-op was started by a catholic priest. this is a--spain is a very catholic country. i mean, it's a catholic country squared. i mean, you know, it's like ireland or poland. i mean, they take that very seriously there, which is very different from france where--i know from my family that--catholicism in my family, and they are nominally catholic. it's a joke. i mean, the priest is always the butt of a funny story, is an idiot, and the way the catholic church is viewed by catholics in france, by many, is clownish. it has to do with the french revolution. spain is not like that, so it's very serious so that it got protection in the early years because it was a project of the
roman catholic church, and that gave them--plus, this is a part of spain that is its own ethnic group. it's called basque. b-a-s-q-u-e. basque. they have their own language. i'm good at languages. i couldn't understand a word of it. and they speak it; it's not a language for festivals. it's a language of every day for many villages in this--it's a mountainous area. so they have an ethnic uniqueness, they're roman catholic, and the church protected, in a sense. they couldn't be attacked quite so easily. it wasn't as if the communist party did this or something like that. it was the church. and finally, there's a long history of the basques not being very comfortable within spain, so they demand independence, they had their own military. there were times when the spanish government tried to control them, but it's a hilly country and they had guerrilla, basically. so the spanish
government is very eager not to have fights with these people because they fight back, so between the church and their own language and customs and their willingness to fight, they had certain privileges, if you like, special conditions that helped make that possible there. that's true. ma'am, i think you were going. >> what role does competition play here? do the co-ops compete with each other? do they compete against the regular corporations, or what keeps them from becoming cutthroat in order to win? >> good question. again, i'm going to use a concrete example rather than a hypothetical. i'm going to use mondragon because it is a very rich source. and there are loads of books and articles on mondragon, including on our website, democracyatwork.info, where we gather all this material, all of which is available to you at your leisure and no cost and so on. here's how mondragon
has done it. mondragon's first commitment is to preserve jobs. it's very interesting. when you ask them, "what is your bottom line?" the answer is jobs. so if, for example, and i'll take an example from them. one of their successful production lines is the fagor. f-a-g-o-r. it's fairly well-known in europe and around the world. it produces washing machines, appliances like that. and the fagor washing machine company has suffered from the international crisis like everybody else, and so the demand for these washing machines has fallen. so they had about 2,500 workers in the town of mondragon, at this factory, and they couldn't use 600 or 700 of them that just--there wasn't a demand for it. so the question is, what do you do? and they have a two-step answer.
first answer: "we are going to share the pain." in other words, if you don't need 600 or 700 workers, the other way of saying that is "you don't need as many hours of labor because there's no point in producing the machines you can't sell." but the question is, why would you want to impose the need to cut back on an all-or-nothing basis? why would a person either be employed or unemployed? because if what you want is x-hundred hours less labor, then it could be that everybody does two hours a week less. that would be what's called sharing the burden of unemployment. so the first rule they have is, you never impose the unemployment exclusively on a subset of people. that is fundamentally unjust and creates
terrible tensions inside the union--if any of you are members of union, you know this--between the workers who are bitter that they lost everything, particularly when many employers will then impose overtime on the workers still working, rather than bring back somebody who's unemployed. so that's the first rule. second rule is, if there are workers that really are redundant because nothing more can be done in this area, or that we've got to a limit of how much we can share the unemployment, then we will find work for those people in another co-op because the mondragon is a parent company of hundreds of co-ops, and they do that. they're very proud that in the current climate of spain-- for those of you that are not familiar with it, spain is now the worst economic downturn of modern spanish history, the worst in europe, 25% unemployment. the unemployment rate in spain today is what it was at the worst of the depression of the
1930s. young people between the ages of 18 and 30 have a 50% unemployment. half of them are not working, cannot find work. it's a--but not in mondragon. mondragon hasn't fired anybody. between the sharing of the unemployment and finding--moving workers around--because that's part of what makes them one company--they have held on. they're becoming wild--more popular than ever because they've been able to do that. they have another rule, and that rule is, whenever a member co-op buys anything, if they can get a better machine or whatever they're buying or a cheaper one outside the co-op, they are told to do it. "we have to be competitive, because otherwise we will die." that's their recognition that they live in a capitalist world and they have to be able to compete, and so they do. the fagor company--it's like a--it's a bigger building
than this--i toured it this summer. it's actually like a football field, but, you know, inside like a big airplane hangar, and it has one huge machine--because this is highly automated--and that machine is german. comes from germany, from a german capitalist enterprise which makes this kind of machine that they use. and we asked them, "well, why didn't you buy it from one of your own?" and the answer is the germans make a better machine. it's a better deal, and that's the rule. "so we have to succeed in a capitalist world, but we can do it"--and this, perhaps, the most interesting thing--"because there's all kinds of advantages we have that a capitalist enterprise doesn't." and they gave me an example. number one, if you're a capitalist enterprise, the price you charge for something has to cover your labor costs, your material costs, and all--like that, but it also has to cover something else: the profits you pay out to your shareholders. so with a big
grin on their face, they say, "we don't have any of those. we don't have to charge that kind of price. we're not a profit-driven enterprise, so we can bring our price down because we don't have to make a profit." they also say, "we don't pay our top executives a wild amount of money, and so we don't have to have a higher price to bring in the revenue that pays these people these outlandish salaries. so we have--we can do something that they can't do." second argument: when every worker is a director and every worker understands the problems of competition, every worker is constantly engaged. every worker is looking for a way to save a buck, to cut a corner, to figure out a way of doing things better, and you're given a lot of recognition and celebration if you come up with a cost-saving. a worker in a capitalist enterprise isn't thinking about that. he's
thinking about happy hour. [audience chuckles] but it's very important because the everyday flood of technical innovation is much more important than the occasional big breakthrough by the scientist. it's all those little things that are cared for by people--and this an old american idea, you know? it's the old idea: if you're invested in it, if it's your little business, if it's your home, you take care of it better than if it isn't. if it's your business in the fullest sense of the word, you have more. then he gave another example. he says, "you know, we are rooted in the community. when something is wrong at the factory, every worker goes and tries to figure out whether the neighborhood they lived, there's somebody who knows something about that who can maybe solve that problem, or someone who's had a similar problem in their line of work. we bring in the entire community because it's all of us. we're not--to use a modern term, we're not alienated from the workplace the way a worker in
capitalism is, and so we have a whole raft of these advantages that give us a chance to out-compete a capitalist on many occasions." and mondragon is, again, a paradigm case. they are the seventh-biggest corporation in spain. they have out-competed all kinds of capitalist enterprises. by the way, just to give you an idea that might surprise you, mondragon has partners, people--enterprises in other countries that admire what they do in certain areas and partner with them. they have labs to develop new techniques. i'll give you the name of two partners you'll recognize: general motors and microsoft. they could help each other. microsoft gets some of the technological stuff that mondragon is ahead, and mondragon gets from microsoft.
might surprise you. so they're quite able. they're quite confident they can compete. given half a chance, they can compete. arizmendi bakeries are doing fine in san francisco, and so is the yellow cab company, and so are many, many others. in amherst, massachusetts-- because i taught most of my adult life as a professor at the university of massachusetts-- there's a little copy shop that was set up 25 years ago called collective copies--hint--and they are a worker co-op and they've been wonderfully successful, and one of the reasons is they appeal to the university. they use lots of students as part-time jobs, and they cultivated a reputation, and they're willing to go an extra mile for a student who's jammed up and needs something at 3:00 in the morn--they do some things that cultivate a relationship with the community, and they out-competed kinko,
things like that, and they were able to do that. and, again, i understand these are isolated, small examples, but i want to remind you capitalism comes into the world, beginning with isolated, small examples, and those have to be struggled over and reproduced and grown, and then something else is possible. another way to put this, and it goes back to your question about the unions, i like to use a parallel with slavery. there are two ways to react to slavery, and you always see whenever there's a struggle against slavery, as there was in this country in the 19th century with our slavery in the southern states. one response to slavery, of people who are critical of it, is to work very hard to improve the conditions of slaves. feed them better, clothe them better, don't allow their families to be ripped apart in the slave market.
all those things we understand. and the movement, the critical movement against slavery all over the united states, including the south, often took the form of a desire to improve the condition of the slaves. but then there was always another wing of the criticism of slavery: the abolitionists who looked at the first group and said, "are you kidding? the problem isn't that they're not well-fed or well-clothed or--the problem is that they're slaves. and even if we had a big struggle and even if we were successful in improving the conditions of the slaves, as long as they're still slaves, it's always possible for the master to take back whatever improvements in the conditions you were able to extract from him. the way to break out is to end the institution of slavery." and there was a big struggle in the united states between these two groups. in the end, lincoln
went and abolished slavery. well, it's really the same issue now, isn't it? either we work real hard to improve the conditions of working people-- their wages, their salaries, their benefits--or we say, "wait a minute. the problem isn't the conditions. the problem is that they're an employee of somebody else who's the employer. and even if we get the benefits, the employer can and will take them away." i already did that 40 minutes ago when i explained to you that what was won by workers in a reform movement in the 1930s--higher taxes on the rich, social security, unemployment, government jobs-- all of that was then taken away. you can't leave it, then, that way. the first time you try this and it's taken away...call it a
learning experience. but if all that is done now is to do it again, then it isn't "shame on them for taking it back"; it's "shame on us for not having learned the lesson." that's why having the alternative, which can succeed competitively, is crucial to opening up the space to think a little more ambitiously than another round of reformist improvements that will be taken away. that's a key part of what this movement is about. other questions? please. >> so what is the new party in germany doing? how is it different than the communist and socialist parties that are all over europe, and does it have anything to do with co-ops? >> yes. the name of the party in germany is called the die linke. "die" is "the," and
"linke" is the german word for "left." they didn't want there to be any ambiguity about where they were coming from, so they basically call themselves the left party, die linke, and it is a party that came together out of two other parties. first was the left wing of the social democratic party, the old established socialist party that has been in the government, has been the government. last leader of germany before angela merkel, the current leader, was a man named schroeder, and he was a member of the social democratic party in germany. the left wing under a very, very charismatic leader, which was important, a man named oskar lafontaine, withdrew from the socialist party in order--excuse me--to found this new party the die linke. the other part of the die linke is the party that used to be the dominant party in what was east germany. you know, the east german and west german separation ended, and the two
countries were unified early in the 1990s. so there's now one germany again, there aren't two, but in the east, which was a communist part of the eastern european block, that party was called the socialist unity party, sed, sozialistische einheitspartei, and that party dissolved, but large numbers of it moved also into this linke. so it's a coalition. in the eastern part--this is something americans tend not to know for reasons having to do with our newspapers and our media--in eastern europe, in eastern germany the mass of people still vote for that party. so that party runs a number of the regional governments. in germany, they don't call them states like we do, 50 states. they call them laender, lands. so many of the laender in eastern part of germany are governed by this die linke party now, and increasingly,
they've become powerful in the west. as i said, the last national election, they got 11.9% of the vote. 1 out of 8 germans votes for a party, one of whose slogans is "germany can do better than capitalism." i like to talk about that party not because it's the same as what we would do here in the united states, but it's an important lesson. the notion that a party could develop politically in a modern, highly industrialized, advanced country, which germany surely is, that is critical of capitalism, you don't have to imagine that it's maybe a possibility. there it is, and germany, by the way, is the number one economy in europe right now. its unemployment has gone down over the last 5 years, whereas almost everybody else's has gone up. germany was a strong economy before. it's much stronger now. it is really the center of the european--the eurozone, the european common
market. so in a relatively successful capitalist economy, the critique of capitalism has a very big resonance in a very large part of the society, and the resonance is magnified because of german law. and let me say a word about that, too. again, for american audiences, very important. under german law, every political party that gets more than 5% of the vote gets two things. one, you get seats in parliament. they do not have the american system of winner-take-all. if the republicans get 51% and the democrats get 49%, the republicans get it and vice versa. all european countries have what's called proportional representation. you get as many seats in the parliament as you get percentage vote in the population. the idea is if 20% of the people believe what you
believe as a party you should not just be able to run, but you should be able to participate in the making the laws. otherwise, those people aren't represented. it's a kind of idea of, i don't know, democracy. [laughter] because you're not gonna exclude 20% of the people, which you do if the winner takes all, and by the way, in the united states, we do that sometimes. some of the primaries of the two parties are--if you read that ron paul got x% and romney got y%, then they each get a certain number of delegates. that's proportional representation, and we've had that in elections in the united states, too, but we got rid of it. the europeans have it. so in germany when the die linke party got 12% of the vote, they get 12% of the seats in the parliament. so 12% of the people who are in the parliament are members of a party that believes that germany can do better than capitalism. highly successful,
capitalist economy produces a criticism, and if you get more than 5%, not only do you get your seats--and that's true in the laender, in the state legislatures, too--but you get something else. you get money from the government because the democratic idea in germany is if you get more than 5% of the people interested in what you have to say, then it is important that you have a platform in which to explain to people what your positions are, what your proposals are so that the population can make an informed vote, and so the government allocates money, which is given to the party for educational purposes to bring its view of what's going on to the population. the die linke therefore qualifies, and they get money from the german government. how much money? 80 million euros. that's a lot
of money. and they set up a foundation, which all parties that get 5% or more--and do you know what the name of their foundation is? the rosa luxemburg foundation. hmm. if any of you are not sure who that is, ask me, and i will explain it. rosa luxemburg, a revolutionary in german history. that's the name of their foundation, and they give money to people all over the world to study critical--concepts critical of capitalism. they just opened an office in new york city. they have offices in many countries around the world. they have opened an office for work here in the united states to meet with and exchange ideas of criticism of capitalism with interested americans. hullo! i can see from your faces you're interested. one more fact about germany. there's a law. every company that has more than 2,000 workers employed must have 50% of the
board of directors elected by the workers. that's the law in germany. they're the most successful capitalist country in europe, and they give more power to their workers than any other one. the notion that if you were to do that you would cripple the capitalist potential--uh-uh. it's the same silly argument that says, "gee. those europeans, they're just not doing real well because they have such a big social safety net," national health for everybody, basically free public higher education, and all the rest. germany has one of the most expansive programs of welfare for its people, and it's the most successful country. their unemployment is significantly lower than that in the united states, but on the other hand of course, for a german worker, like for most european workers, being
unemployed doesn't have the meaning it does here because since they all have a national health system you get your national health whether you have a job or not. when you lose your job, you do not lose your health insurance. you can't lose your health insurance. it's yours by right of citizenship, but i wouldn't want to go into that because i wouldn't want to get americans upset. [laughter] someone else was about to go--please. >> as a student, what role would education play in the cooperative ethic, and how could we cultivate cooperative education for people instead of the competition that you see at places like stanford of which i'm a student? >> heh. ok. i was once a student at stanford myself, so i feel a certain amount of compassion and--with your suffering. excuse me. your education. [laughter] our education system would have
to radically alter like everything else in our culture. we're not talking about a marginal adjustment. we're talking about a basic change. production is how we live. what, we get up in the morning and have a cup of coffee? that's a product of labor. and we put on our clothing. those are products of work. and we get in the car. that's a product of work. work, production is central to literally every day, every minute of our lives, so if we reorganize that, we are gonna change everything else, and education would be an example. well, i said a little bit before. let me expand on it. we have a highly stratified, ranked education system, and since i'm a product of it in spades, let me use myself as an example, all right? as an undergraduate--i'm the child of immigrants. my parents are european, so i was born in the united states, but english is my third language. i spoke french and german because my
parents--my father was french, my mother was german. so as an immigrant, i came here as refugees. i had no money or anything else. so i go to school, i go to harvard as an undergraduate. then i go to stanford because there was a professor there i wanted to study with, and i got a master's degree, and then unfortunately this professor had a heart attack and died, and so i completed my education at yale. so here i am, harvard, stanford, and yale, by most american standards sort of a poster kid for elite education. that's what it is. it's elite education. it is designed for people not like me. i was one of those allowed to come in, and they've regretted it ever since. [laughter] allowed to come in on scholarsh--i had to have financial aid. my folks didn't have the money, et cetera, et cetera. i had to work all the time, that kind of thing, but it's an education--let me give you an example. as a freshman,
we had an orientation about 5 days before the semester began of my freshman year. we all came early, and we were gonna get oriented, and we sat--we were brought into a big room, and in those days, harvard was separate from radcliffe, which was sort of the female up-the-street school, and so they didn't meet with us for whatever the thinking in those days was. so it was all young men, and the president, whose name was nathan pusey--that was his name--president of harvard, welcomed us with the following speech, and it stuck in my mind. 18 years old at the time. he said, "look at that man on your left," and we all dutifully did that. "look at the man on your right." said, "one of them is going to be a captain of industry, and one of them is going to be a senator. that's where you are, and we're here to teach you how to run
the world." that's what he said! you know, you're 18 years old, your head is getting larger as the man talks because you're being given this sense of what's expected of you, what's in store for you, almost nigh what you're entitled to when you come here, and it produces a fundamental human quality that many of you have noticed in graduates of these institutions--arrogance, mind-bending arrogance of the sort that assumes that if you go to one of these schools something really magical happens to you. i can assure you it doesn't. if you have learned that when you see an advertisement for a bar of soap and the advertisement explains to you that if only you use this bar of soap overnight your sex life will be transformed, well, you all giggle, as you are giggling now, because you
understand this is an attempt to get you to buy the soap. you don't take seriously that it's gonna have that result, and if you did have that result, it probably wouldn't be because of the soap. you kind of figure that out. when harvard says to you that "something really extraordinary happens to"--it's like that thing with the soap. ok. all that would have to change. you could not have schools that train the people at the top versus schools that train the people in the middle and schools that train the people at the bottom, which is what we have. we don't admit it because it's a little awkward, but we all know that. we know that. we know it from the way budgets are allocated. we know it from the qualifications of the teachers. we know it from the quality of the textbook. we know it unless we really are committed to make-believe. we can't do that anymore, and it's not out of some abstract idea.
we've had generations of very good people trying to change our educational system by saying, "it's really not appropriate. we don't know what the skills of young people--we shouldn't segregate them this way. we shouldn't track them this way," but it goes nowhere. it's an endless effort of good people, but it never lasts even if they get it for a while. you have to make it an institutional requirement. if workers have to be able to run an enterprise, you're gonna have to teach them, too. you're gonna finally have to democratize the education process and not out of some abstract idea because, as many of you think i'm sure when i said this, when i said to you, "the workers will run it," you go to yourself, "my god. i can think of a worker down where i work. i don't want him to run. he doesn't know what he's doing." of course! how could he? why would he? why would she? nothing in their lives ever prepared them for this. their parents never gave them the idea they would ever
be in such a situation because they weren't. the teachers didn't likewise for the same reason. why develop an appetite in somebody who you can't ever satisfy that appetite? all that has to change because we need people to have the skills, the qualifications, the sense of themselves, the confidence, the desire to be a director, to be a planner, to be part of the decision-making because it makes your life much more interesting than coming to work and doing what someone sticks in front of your nose and tells you to do. that's a fundamental democratic idea, and, yes, i think our education system would have to change, and again, let me use a concrete example. because part of my family is french, i go to france a lot, i speak french, i have since i've been a little child, and i remember once years ago having this little epiphany moment speaking to a friend of mine. i went as a visiting professor to the university of paris. it's a big university, has several units
in paris. university number one--they're numbered 1 to 10 or 12. one is what used to be called the sorbonne, old, in the middle of the city, old--beautiful buildings coming out of the louis whatever who built it. so i taught there, and i got to know some of the professors. i sat down with the one who had invited me, and we kind of compared notes about his salary and kind of how he lived and what he got. so let me tell you. he'd get about the same salary i did. so we had the same amount of money more or less except the following things. he had a daughter--i think she was 6 or 7--named sandrine, a common name in france, and the first thing that blew my mind was he was eligible to take her to the local municipal child care center. that's everywhere in paris. he could bring her 6 days a week from as early as
7:00 in the morning, and she could stay there as late as 7:00 in the evening or any part thereof, some days, some not, some hours, whatever you wanted. she would have a--she had a little outfit there. she comes in. you know, french, they're very nicely done, and then she takes off that and has a little smock that is for the children in the school. she's given meals if she's there at mealtime and snacks. a very elaborate program, and the flat rate, whether you use it 1 day a week or 6 days a week, $17.00. so the first thing i realize he gets the same salary as me--heh heh--but he doesn't--and then i got the other part, the university. it doesn't cost anything, nothing. $100 a year or $100 a semester, i don't remember, fees, but nothing. now that doesn't--they don't have dormitories, i don't believe, and that kind of stuff really, so that's your own expense. they don't pay for that, but you don't have any expense to go to school, and
then i said, "my god. it's amazing. what about the private schools?" and they looked at me and said, "we don't have that." i said, "what do you mean you don't have it?" well, they said, "if you had a private school and a public school, that wouldn't be democratic. the rich people would all go to the private school, and everybody else would be done--so we don't. do you have that in america?" [laughter] and i told them, "yeah, we do, and i come from--ehhh--the private one, very expensive." it was a revelation. this was a very worldly guy who knew--but he didn't know that just like americans don't know what i just told you either. they don't know that--this is common in europe. very common in europe because it's thought of as like having, you know, first and second class in the train, which by the way the french did have. they don't have it anymore, but they use to have on the subway, for those of you
who remember, the old metro, the car in the middle was the first class, and the cars on either side were second class, and the ticket was cheaper--on the same train--if you went in the one car than the other, and the cars were cleaner and a little neater and a little nicer if it was first class, but then with the--in the 1960s, part of the great 1960s uprising, they got rid of that because the population said, "no more of that. that's outrageous." so now it's only one class on the french parisian subway. but, yeah, i think uni--i say all this because universities would have to change, would all become public or would all become a kind of complicated, serious education for everybody. another way of putting it. liberal arts education was always the idea that what you want is you want to develop a person with many capabilities. remember the--many of you notice when you're a freshman
or a sophomore you're required to take a course in the arts and a course in social science and a course in natural. the idea is you're a young person. you don't know what your capabilities are. you should take a lot of different courses to find out what really excites you. maybe for you it's anthropology and for you it's chemistry and for you it's astronomy and so forth. the idea is you want to develop multiple capabilities, and the implicit notion is because you're gonna be a person who runs this society, and if you have to make decisions, the most important thing for you is to know is a lot about things, to have not so much detailed, specialized knowledge but the ability to be flexible, to see a situation and imagine an alternative, and for that kind of education, you should read some greek drama, and you should read some history of polynesia and a whole bunch of other things that are gonna reverberate in your--and not be a vocational education student who learns how to do with a ball-peen hammer and certain
kinds of metal. not that that isn't a useful function, but it shouldn't be limited to that. we don't do liberal arts education except for a very small portion of our population, and it shows because even compared to other countries, like european countries, there's much more of that kind of generalized education for all kinds of historical reasons. my parents were astonished when i was a young student that we didn't have to learn greek and latin. my parents had to learn greek and latin. they had to read greek literature and latin literature, and when i came home and scoffed at my parents and said, "it's a dead language," they got enraged and went in to talk to the teachers, who repeated that it was a dead language. so therefore, who needs this? we only need the latest hot stuff. very sad. so, yes, i think it would be a radical reorganization of our education system because it would need to give everybody the capacity to
be a member of the board of directors of a collectively run enterprise. we would need to do that to make this system work just like capitalism doesn't need to do it, and so it doesn't. let me be hard with you for a moment because i spent my entire life as a professor. that's all i've ever done, so i'm an education person. most of the people that i know who are serious professors hate giving grades. i hate it. most detestable part of my--there i am. i've barely met a student over a semester, i've given a bunch of lectures, read a few little exam questions hysterically written by an overpanicked young person who's probably imbibed all sorts of substances in the preceding 24 hours, et cetera, et cetera. present company excepted. um, and i'm supposed to give them a grade, an "a" or a "b." you know what that's like? that's like sorting potatoes. there's an "a" potato
and a "b" potato. this one has little knobbly things on it. so it's not an "a" potato. i'm not in the business of potato grading, and who is that for? and the answer is that's for the employers, and it's for the employers to know who to hire. i'm the first grid. you know, you perform nicely, so you're an "a." you don't perform, you're a "b." you really performed lousy, you're a "d." that's help to the employer. i don't want to help the employer. that's not what i signed up for. i'm not interested in this, and there's even worse. this meritocracy fakery that we do in this society, that is a scandal and a cruel one. we don't have enough jobs in this country for the people who are perfectly capable of filling them. we got a problem. way too many people with good skills for the jobs we produce. now the rational
solution would be to find the jobs, to give them a chance to do what they want to do and they can do. we don't do that. we have no way of doing that. we're not driven by providing people with work. that's mondragon. we're driven by making money, so we don't want these people, but it's very dangerous. they want an education, and they got one, so now they want the job, but we don't have the jobs. how do you solve this problem? as and bs and cs and harvards and the local community college because it allows us to say, "we got jobs for you, you, you, but not for you and you and you, but that's not because of anything wrong with the system. it's because of you. you went to blehh school. you got a buhhh
grade at a blehh school, so don't blame the system. it's you. you didn't work hard enough, you didn't go to enough school. you didn't take that extra course. you didn't take the princeton prep to get your sat scores up. buh buh buh buh buh." you know the horrible routine, but the cruelty is you're blaming the individual for a failure of a system to make use of its resources, of its people, and so people get very down on themselves, and they spend their rest of their life feeling really inferior. very, very cruel way to not solve a problem in a rational way. all that would have to stop. you'd have to really reorganize education, and as someone who has watched this cruelty play out on 10 generations of students, it is awful to watch. my colleagues, who are not--as you might have
guessed, i am not on the right-wing end of politics, but my colleagues, some of whom are and others who are in the middle, one of the few things we could always agree upon was that there is--the problem with our graduate students and our und--was never their capability. it was mostly their sense of their own capability. they actually had the ability. they just didn't believe it, and by the time they got to us, that was so deep in them not to believe in it that it was a self-fulfilling kind of belief. very tragic. you know, most people who begin a ph.d. program in the united states never finish it, the majority, and that's not because they don't have the capacity. it has nothing to do with it. no correlation at all between the capability shown when a student enters and the probability of their completion, none. we've done that work. none. these are psychological problems. the
most important thing that an economics graduate program in the united states could ever have is a full-time professional shrink. [laughter] would be the best thing that could happen to the students in the--no. i'm very serious. it's the best thing that could happen to the students. the success ratio would go way up, the quality of the program. very serious issue. so i'm glad you asked the question. it's about a dramatic change in the education that would have to happen. how many more do we have time for? last one. ok. >> very quick question because this is election season, and given that we're in a system that precludes systemic critique, occupy protests not withstanding, to vote, or not to vote? >> well, as i drove down here, which by the way since i come from new york city i do have to say in all honesty we don't have traffic as horrific as i
just had driving from san francisco. i sat on 101 for an interminable amount of time. incredible. anyway, as i was sitting in my car, i had the bad luck to listen to the democratic national convention speeches, which were an exercise in b.s.--to be as polite as i can about this. there's not only no systemic critique, there's no alternative. the solutions offered are more of what they've done. they're pretending that it's been wonderfully successful because they're the in president just like the other guys had to claim it was a big disaster. first of all, the president politics in this country is a very peculiar institution. let me close with that because it's really important. the united states is unique in the world, i think, for the following. we
have been the most successful in convincing the american people of something that's patently absurd, and that is that when they have an economic problem it's the fault of the government. it's stunning. 95% of the people who've lost their job in this crisis--and there are millions of them--were fired by a private capitalist employer. if you're gonna get angry at somebody because of unemployment, the logical target is the company that fired you. not in america. our people are trained. they leap over the company that fired them to the politician, the senator or the congressperson whom they're very angry at, who had absolutely nothing to do with it. the overwhelming majority of people who've been foreclosed out of their homes were foreclosed by a private capitalist bank or lender, and
who are they angry at? "um, um, politician"!" what? just the best possible system for capitalists. you kick the mass of people, they get angry at somebody else. you kick them again, they get more angry at somebody else. you are exempt. this is stunning. how did you do this? and then there's this general blame the government, blame the government. the government is the problem. why do i say it's patently absurd? george bush, our president--do you remember him? that one who disappeared for the republican national convention? he must have gone fishing. george bush vanished, but he and the republican party had every interest in making sure that the last 6 months of his presidency were not a time of economic collapse because what it would mean is that the republicans would be run out of office on a rail, which they were, and his political
leadership was unable to do anything about it. they rode bush out of office. obama rode in because bush couldn't stop the economic crisis. mr. obama may be ridden out of office for the same reason because he, with all of his clever advisors, has been unable to solve this crisis. so don't tell me the politicians are in control. clearly if they were in control, they wouldn't possibly do what they're doing, but that's all they can do, and the reason they can is because the separate decision-making is in the hands of the corporations who make all these basic decisions for their own reason and in their own competitive struggles, but this--this notion of the government and then the blaming the government for everything, it makes the people angry at the government, and why would that be interesting? that goes back to something i said to you
before, and it's a good way to end. the danger of politics in capitalist systems is that when the mass of people are screwed bad enough in the economy they're going to turn to politics to try to undo what happens to them in the economy. in the economy, they are dependent. their jobs disappear, their income is shrunk, all the suffering that we know of, and they're gonna turn to politics where it's one person, one vote. maybe they have a chance to compensate, to undo the economic disaster they're suffering by a political intervention. the business community long ago understood you got to deal with that. it's [indistinct] understanding. if fewer and fewer people become richer and richer, they've got to worry that the mass of people that are excluded from this enjoyment are gonna get angry, and they're gonna try to use politics. solution--control the politics, neutralize the
politics. the american training--"the government stinks, they're all crooks"--these are ways to get people away from the political engagement that might otherwise give them a way forward in this situation. very dangerous, very strange. so my response--we're stuck. we got two terrible problems. we don't have proportional representation, which is a staggering contradiction with democracy just like the way we run our businesses is, and secondly, we've got tweedledum and tweedledee as the two parties, who exchange positions every few years, and we sit there, and with each convention, like the last week and today--by the way, the reason there aren't more people here is they're at home watching barack obama, right, so tough competition for me. so we have to do something to break out of a system that
doesn't allow minority parties to have a voice the way they do in all of our allied countries and to have more than the choice of two. you know, if you went into your local supermarket and there were two kinds of soup, chicken and rice, and two companies that made them, campbell's and progresso, you'd feel as though this was not a very good store. you'd like more choice. we want 27 kinds of toothpaste and 16 kinds of soup and 12 kinds of ice cream, but two parties is enough. what is that? what is that? why two? what is--their magic number? it's a strange country. doesn't want more choice than two. even if it's hard to tell them apart, you don't want more than two. it's very strange, but the whole politics is handled here as a bizarre kind of excuse, and the contradictions are legion. the
same politician that you mock and that you call a crook, when he sends your kid to war, you go and you stand at the parade. the same politician is a great commander in chief. he was a rotten crook last week. so when it comes to the foreign, "ohh, ohh, ohh!" the contradictions here--if he was a crook at home, maybe he's a crook abroad, too. it's possible. very strange. all of that has to be opened and questioned, but my conclusion is it's happening, and again, i'll use myself. people like me are on "charlie rose," and i'm traveling all over the country, do 1, 2, 3 radio and television programs almost every day, and i turn down as many as i get because i can't physically do it, but the only sad thing is i
wish there were a lot more of me around, but i'm part of a generation that didn't produce very many of me since it wasn't what harvard, stanford, or yale was interested in. made plenty of good economists but not with a critical perspective. no one helped them do that, and it wasn't good for your career, so they didn't go that way, but this country is changing, and i really am living proof. my audience is bigger than anything. in the last two years, i've done more public speaking than in the previous 40, and i've always been active, but it's just completely different. now a critique of capitalism is an acceptable part of what people want to hear. it's not that they necessarily agree yet. no, but it's part of the conversation. it used to be outside, beyond the pale, too scary. that's gone. that's just gone. whatever you're worried or thinking about the tea parties
and what they represent, sure, they're there. they represent a point of view, but on the other end of the spectrum, the change has been at least as profound, and so it's a wonderful time for folks like me because we have audience in the united states we have never had in at least half a century, and it's therefore a time of extraordinary opportunity. we've taken more of your time than we should have. thanks again. [applause]